I recently read The Psychology of Money by Morgan Housel. Lately I’ve been trying to take notes when reading non-fiction books. The notes really just consist of my favorite quotes from the books. Here is one of my favorite quotes from The Psychology of Money:
Do not aim to be coldly rational when making financial decisions. Aim to just be pretty reasonable. Reasonable is more realistic and you have a better chance of sticking with it for the long run, which is what matters most when managing money.
The above quote was actually in reference to investing behavior, but it resonated with me in terms of spending and saving as well. On the FIRE journey, there can be a lot of pressure to be as frugal as possible and generally make the most rational financial decisions. But, we’re not robots.
I liken it to dieting. If you completely deprive yourself of the things you enjoy, it’s very likely that you’re going to get frustrated and give up. It’s necessary to enjoy the journey along the way and not live a miserable life in pursuit of a goal. At least that’s how I feel.
We recently made two large purchases that some in this community may see as irrational. We bought a house, and we bought a dog. However to me, these purchases are completely reasonable. They’re reasonable because we can afford them. Yes, our savings rate will take a hit, which will increase our time to reach Financial Independence, but we are okay with this, because we also want to enjoy the journey to FI.
The same line of thinking can go for smaller purchases too. We still spend $200-$300 a month on restaurants and take-out. Sure, these purchases might not be rational when it comes to pursuing FI, but for us, they’re reasonable. We enjoy take-out and we enjoy not having to stress every single night about what we should make for dinner that night.
What is considered reasonable for one person might be seen as completely irresponsible to another. We are all on our own financial journey. While it helps to look to others for inspiration, it’s important to remember that no two journeys are the same. Don’t stress over someone else’s finances. Spend the time understanding your own as best as you can so that you can act as reasonably as possible.